Question :
101.Regal Real Estate which maintains its accounts the basis of : 1237586
101.Regal Real Estate which maintains its accounts on the basis of a fiscal year ending June 30, began the management of an office building on June 15 for an agreed annual fee of $4,800. The first payment is due on July 15. The adjusting entry required at June 30 is:
A. A debit to Management Fees Receivable for $200 and a credit to a revenue account for $200.
B. A $200 debit to Unearned Management Fees and a $200 credit to Management Fees Earned.
C. A debit to Cash for $200 and a credit to Management Fees Earned.
D. A debit to Cash for $400 offset by a credit to a revenue account for $200 and a liability for $200.
$4,800/12 = $400 × ½ = $200
102.Great Kids Co. began providing day care for the children of employees of a large corporation on January 15 for an agreed monthly fee of $9,000. The first payment is to be received on February 15. The adjusting entry required by Great Kids Co. on January31 includes:
A. A credit to Child Care Fees Earned of $4,500.
B. A debit to Child Care Fees Receivable of $9,000.
C. A debit to Unearned Child Care Revenue of $4,500.
D. A debit to Fees Receivable of $9,000.
103.Adjusting entries help achieve the goals of accrual accounting by applying the following two accounting principles:
A. Business entity concept and realization principle.
B. Cost principle and the accounting equation.
C. Realization principle and matching principle.
D. Matching principle and safety principle.
104.Which of the following is the accounting principle that governs the timing of revenue recognition?
A. Realization principle
B. Materiality
C. Matching
D. Depreciation
105.Which of the following accounting principles is concerned with offsetting revenue with the expenses incurred in producing that revenue?
A. Realization principle
B. Materiality
C. Matching
D. Depreciation
106.Dolphin Co. received $1,500 in fees during 2014, 1/3 of which will be earned in 2015, the rest was earned when the amount was received. The company should report which of the following amounts as income in 2014?
A. $1,500.
B. $500.
C. $1,000.
D. $0.
$1,500 × 2/3 = $1,000
107.Swordfish Co. earned $75,000 in 2013 and expects to receive 2/3 of the amount in 2014 and the remainder in 2015. How much revenue should Swordfish Co. report in 2013?
A. $0.
B. $25,000.
C. $50,000.
D. $75,000.
$75,000 × 100%
108.The concept of materiality:
A. Involves only tangible assets and not intangible assets.
B. Relates only to the income statement and not the balance sheet.
C. Is always an exact percentage of a financial account balance.
D. Is measured as an item significant enough to influence the decisions of users of financial statements.
109.Which of the following statements concerning materiality is true?
A. Generally accepted accounting principles are violated if estimates are used in end-of-period adjustments.
B. Each year the Financial Accounting Standards Board (FASB) publishes the dollar amount considered “material” for each industry.
C. Immaterial items should be handled in the most expedient manner, even if resulting financial statements are not completely precise.
D. Accountants should not waste time and money in recording transactions involving small dollar amounts.
110.The concept of materiality:
A. Treats as material only those items that are greater than 2% or 3% of net income.
B. Justifies ignoring the matching principle or the realization principle in certain circumstances.
C. Affects only items reported in the income statement.
D. Results in financial statements that are less useful to decision makers because many details have been omitted.
